Federal Reserve impact on inflation, growth and exchange rates: What happens to inflation, growth and exchange rates when the Federal Reserve increase the discount rate?

In the paper by Degrauwe, The Governance of a Fragile Eurozone by Paul De Grauwe, he argues that the fundamental problem in the Euro-zone today is that countries cannot borrow in their own currencies.  Explain what he means by this and what the consequences of this are for Euro-zone countries currently in crisis. DeGrauwe argues that countries in the Eurozone monetary union can face both liquidity and solvency crises – problems that could not occur in a country that issues its own currency, like the UK.  Explain. Refer to his comparison of Spain to the UK.

Briefly describe the current international monetarysystem. How does the current system differ fromthe system that was in place prior to August 1971?

If the U.S. government has easy (cheap) access to foreign savings, through what mechanism will crowding out occur?     interest rates   current taxes   future taxes   money supply

Suppose that at the initial equilibrium we know that the price level in the Eurozone is PE = 90.91, the dollar-euro expected exchange rate is E = 1.1, and that the interest rate in the Eurozone is 3%. $/e For the US variables take the same value as the ones specified in the beginning of the problem. Assume now that the Federal Reserve unexpectedly and permanently increases the nominal money supply from M* = 100 to M* = 105. Assume that the European Central Bank remains passive, making no changes to its monetary policy. Based on this information answer the following questions: 1. Find the new short-run equilibrium (interest rate, exchange rate, real money balances). Note that the shock is permanent, so expectations of the exchange rate should change. 2 2. Find the long-run equilibrium (interest rate, exchange rate, prices, real money balances). Is the exchange rate overshooting in the short run? Why? 3. Plot the dynamics of the variables of interest with respect to time. Denote T the…

To prevent an appreciation of the British pound, the U.S. Federal Reserve has to: Sell U.S. currency Buy British currency Sell British currency Devalue the U.S. dollar

How would each of these events affect the supply or demand for Japanese yen?  A) Stronger U.S. economic growth. B) A decline in Japanese interest rates. C) Higher inflation in the United States.